How to Take Advantage of the Gift Card Market
by JimD, Former Moderator
- Created: January 12, 2011, 11:57 am
- Updated: May 27, 2011, 1:17 pm
Many people have difficultly shopping for others, which make gift cards an enticing option. Consumers will spend billions on gift cards this year and as a small business, you do not want to an opportunity by not offering gift cards. You may think you are too late by missing the holiday season, but some of the major gift card holidays are Valentine's Day, Mother's Day™, Father's Day™, and graduation.
Using Gift Cards
Many people do not feel they have the technology to offer gift cards, but it is getting easier and easier. If you have a point of sale system, keeping track of your gift cards is simple. You just have to keep track of how much is put onto the card and how much is being used. You can order custom gift cards online with barcode or magnetic strips printed right on them.
Another option is to contact your credit card processor. Some of credit card companies offer gift cards that you can leverage. This makes it very easy because they will keep track of the balance. You can simply design the front of the card to have your business name and logo.
If you do not want to go the route of gift cards, you can still do a gift certificate. These are extremely easy to do, since there is no technology involved. You can design a certificate on your computer and print them out. You will want to remember to sign them or number them, so they cannot be counterfeited.
Accounting and Gift Cards
Gift cards are unique since you get the money upfront and then you have no idea when the gift card will be used. Some people hold on to them for years, while others spend it right away. You will want to talk to your accountant on how you need to record the sale of gift cards.
Some businesses count the sale when the gift card is sold and others count the sale when it is redeemed.
Gift Card Laws and Regulations
With the recent credit card laws that were passed, gift card regulation also became stricter. Some of the new rules that went into effect August 22, 2010 include:
- Money on a gift card cannot expire for 5 years after it was bought or reloaded
- Inactivity fees can only be applied after 1 year and can only be charged once a month
- The expiration date and fees must be clearly disclosed
These updates to the law shouldnâ€™t discourage you from a using gift cards, it is just something that needs to be considered. As gift cards become more popular, especially with restaurants and small businesses, you may want to consider offering this alternate payment option if you do not already.
For more information on using and offering gift cards, see these guides from the Federal Trade Commission:
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